UPS: The Poster Child for a Jobless Recovery

Analysts like to say that United Parcel Service Inc. is a canary in the coal mine of the U.S. economy. If more packages are being sent, more business is being conducted, more products are being purchased

Bloomberg News

A driver exits his truck at a United Parcel Service sorting facility in Hodgkins, Ill., last month.

Well, UPS’ latest earnings forecasts show that the company appears to be a healthy canary in a sick coal mine.

UPS raised its fourth-quarter earnings target citing improving domestic and international shipping revenue and a brightening economic outlook. This on the heels of Internet retailers reporting a better-than-expected online holiday shopping season, which translates into more packages being shipped by UPS and its rivals.

But at the same time UPS was giving its rosy outlook, sending its stock up 5%, the package deliverer cut an additional 1,800 people from its 340,000-person U.S. work force. This is on top of the 13,000 jobs it cut last year.

UPS reflects what is vexing to policy makers about the current “jobless” economic recovery. Here is a healthy company that is shipping more products, raising shipping rates and enjoying a rallying stock price and yet it is cutting jobs, not creating more of them.

UPS says the job cuts were part of a long planned restructuring program, not a reaction to the slow economy. Still, UPS isn’t hiring. So what is it going to take to get businesses to start adding jobs again?

White House economic adviser Austan Golsbee told CNBC this afternoon that the “main driver” of job creation will be when companies believe the economy is recovering. But UPS just stated today it believes the economy is healing gradually.

Talk, of course, is cheap. Hiring employees is a much more costly wager on the economy’s health–one that even robust companies, like UPS, aren’t willing to make.

Comments (5 of 13)

All well and good...fact remains that with the Teamsters in control, unlike most businesses, we can't fire someone for no-calling an excessive amount of time

Have any idea how painful it is to KNOW that someone shouldn't have a job yet all you can do is verbally warn them, document it, and request a warning letter?! The discipline system at UPS is a joke...

4:38 pm January 12, 2010

UPSer/Managment wrote :

Coming from being a Union employee to managment....there are few people in my center that need to go. In fact they should get rid of most "full-time" managment when all of the "part-time" managment do the work. Every hourly deserves every penny they work for and then some!! It is mostly upper managment that beats down on the employees and makes me regret going into managment. But I hope I still have a job come FEB.

9:19 am January 10, 2010

UPSer wrote :

What the author doesn't recognize is that this 1800 person cut is not related to the economy. It is related to senior management finally having the guts to force the elimination of redundancy, low performers, Retired in Place performers, and focus on the customer and the bottom line -- not group hugs and protecting the old-timers just because.

As for Teamster's pay -- it is NOT a case that they do or do not deserve it (I've done my time in the car) but how we compare to FedEx. And right now, it is not favorable. Either UPS and FedEx get covered under the same Labor Laws (the right thing) and their new "employees" get to Union-ize, or our Union folks are going to have to give (an unfair thing, but the reality of politics...)

6:48 am January 10, 2010

Recent Retiree wrote :

Great company w/ huge issues. Q1 2010 reduction of 1,800 employees announced is needed and almost exclusively targeted at mid and upper level white collar jobs. However, the reductions don't come close to addressing the needs of the company. Profit margins at UPS had been double digit and typically above 13/15% for ever but last quarter saw US margin shrink to 7% and this is the continuance of US margin declines that has been going on for 5 years. The gig is up! 1,800 reasonably well compensated jobs going away represents .4% of our employees. Bottom line ....we are not growing revenues nearly in line w/ our cost increases and like the auto companies in US taught us it doesn't take long for that margin decline to quickly shift to huge losses. The UPS package delivery service providers are paid far more than the competition pays theirs and UPS cannot compete much longer unless the competition is forced to pay the union wage or UPS is given some fllexibility on cost from the teamsters (and pilots) unions. This is a mathermatics equation needing answering in a competitive environment and UPS can cut 5k management jobs and it won't solve the problem. The company cannot out execute the competition w/ the numbers stacked up against us on the cost side as they currently are. Either FDX pays the teamster wages (not likely), the teamsters give UPS real cost reductions, or UPS winds up looking like the auto's

4:12 pm January 9, 2010

Brown Employee wrote :

If anyone thinks UPS Teamster employees are over paid. My response is try it for a day. We deserve every penny we earn. The inside view of UPS management tactics would be eye opening if it were exposed to the general public! Daily threats are taking it's toll on the mental health of many UPSer.

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